From FT Alphaville:
Forget gold. The ultimate defensive investment strategy in the UK appears to be farmland.
Consider the following chart, included in a press release from property consultants Knight Frank, which compares the performance of UK farmland with that of the FTSE. Pay close attention to relative performance during the third quarter of 2009:
As the property consultants noted in the release...MORE
Value of UK farmland could double in five years:
The surge in pricing is set to be driven by a shortage of quality farmland as the global population expands and demand for food increases.
These factors have already helped farmland avoid the worst effects of the financial crisis. Despite the worst financial crisis since the 1930s, before the end of the year land values are in line to recoup the 5.5pc falls seen after the collapse of Lehman Brothers.
Farmers have been seeking to expand their land holdings as their incomes grow, while lifestyle buyers and investors are increasingly attracted to the solid returns of rural Britain as credit becomes more available.
According to Knight Frank's annual forecasts, this is in sharp contrast to UK house prices, which will not recover their 2007 peaks until 2014.
The value of farmland will increase from a peak of £4,970 per acre to £10,000 by 2015, the property agent says. This includes an 11pc growth in 2009, despite the recession, then a 9pc rise in 2010, 15.8pc in 2011, and 16.2pc in 2012....MORE
The hedge fund manager who bought a farm
Hedge Funds Buying Farmland
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Finally a story from John Kenneth Galbraith:
This tale is said to be told by John Kenneth Galbraith on himself. As a boy he lived on a farm in Canada. On the adjoining farm, lived a girl he was fond of. One day as they sat together on the top rail of the cattle pen they watched a bull servicing a cow. Galbraith turned to the girl, with what he hoped was a suggestive look, saying, "That looks like it would be fun." She replied, "Well.... She’s your cow."